Q2 2024 The Middleby Corp Earnings Call
Good day, and thank you for joining us for the Middleby second quarter 2024 conference call. With us today from management are CEO , Tim FitzGerald, CFO , Bryan Mittelman.
Speaker Change: Chief Technology and Operations Officer, James Pool, Chief Commercial Officer, Steve Spittle, and Vice President of Investor Relations, John Joyner. We will begin the call with the opening remarks, then open the lines for questions.
Operator: With us today from management are CEO Tim FitzGerald, CFO Bryan Mittelman, Chief Technology and Operations Officer James Pool, Chief Commercial Officer Steve Spittle, and Vice President of Investor Relations John Joyner. We will begin the call with opening remarks, then open the lines for questions. Instructions on how to join the queue will be given at that time. Please note that this event is being recorded. I would now like to turn the conference over to Mr. FitzGerald. Please go ahead.
Speaker Change: Instructions on how to join the queue will be given at that time. Please note this event is being recorded. I would now like to turn the conference over to Mr. FitzGerald. Please go ahead.
Timothy Fitzgerald: Good morning, and thank you for joining us today on our second quarter earnings call. As we begin, please note there are slides to accompany the call on the investor relations page of our website. We were pleased with the performance of our second quarter as we posted strong profitability despite revenue declines versus 2023, reporting margin expansion at both our commercial food service and our food processing businesses. In our residential business, we demonstrated margin improvement from the first quarter while we continue to navigate the disrupted housing market, which remains at near all-time lows. We were also pleased to report another record quarter in operating cash flow, both for the quarter and the first half of 2024.
Speaker Change: Good morning and thank you for joining us today on our second quarter earnings call. As we begin, please note there are slides to accompany the call on the investor relations page of our website.
Speaker Change: We are pleased with the performance of our second quarter as we posted strong profitability despite revenue declines versus 2023, reporting margin expansion at both our commercial food service and our food processing businesses.
At our residential business, we demonstrated margin improvement from the first quarter while we continue to navigate the disrupted housing market, which remains at near all-time lows.
Speaker Change: We were also pleased to report another record quarter in operating cash flow, both for the quarter and the first half of 2024.
Timothy Fitzgerald: Cash flows generated by our business have normalized following the disruption in the supply chain, and we have rapidly reduced our leverage over the past year while at the same time making investments in critical strategic and operational initiatives positioning us for the future. Although we reported Q2 revenue declines versus the prior year, orders trended positive in the quarter, and we realized order growth at all three businesses in comparison to the prior year. Activity levels have generally improved with order quoting and projects in the pipeline.
Speaker Change: Cash flows generated by our business have normalized following the disruption from supply chain, and we have rapidly reduced our leverage over the past year, while at the same time making investments in critical strategic and operational initiatives positioning us for the future.
Although we reported Q2 revenue declines versus the prior year, orders trended positive in the quarter, and we realized order growth at all three businesses in comparison to the prior year.
Speaker Change: Activity levels have generally improved with order quoting and projects in the pipeline. We're also excited to see the interest in our many new product innovations across all our businesses.
Timothy Fitzgerald: We're also excited to see the interest in our many new product innovations across all our businesses. However, although we are well positioned, we remain cautious given macroeconomic factors, including high interest rates and the impact of inflation on the consumer, which continues to present a challenging backdrop for the second half of the year.
Although we are well positioned, we remain cautious given macroeconomic factors, including high interest rates and the impact of inflation on the consumer, which continues to present a challenging backdrop carrying into the second half of the year.
Timothy Fitzgerald: At our Commercial Food Service business, we've seen gradual improvement in ordering levels throughout the first half, with a slow ramp-up given continued longer lead times for permitting and construction, along with longer deliberation on customer business plans, given the current economics of higher restaurant operating costs and monitoring of restaurant traffic levels. While conditions are challenging, our channel partners have built backlogs weighted to the second half of the year, and our chain customers have plans for operational upgrades and store openings. These plants have slowed in comparison to our original expectations at the start of the year but continue to remain stronger in the second half compared to the first half.
Speaker Change: At our commercial food service business, we've seen gradual improvement in ordering levels throughout the first half.
Speaker Change: With a slow ramp up, given continued longer lead times for permitting and construction, along with longer deliberation on customer business plans, given current economics of higher restaurant operating costs and monitoring of restaurant traffic levels.
Speaker Change: While conditions are challenging, our channel partners have built backlogs weighted to the second half of the year.
Speaker Change: and our chain customers have plans for operational upgrades and store openings.
Speaker Change: These plants have slowed in comparison to our original expectations at the start of the year, but continue to remain stronger in the second half versus the first half.
Timothy Fitzgerald: We also continue to focus on new market share opportunities, expanding into underpenetrated categories for Middleby, such as beverage and ice. We're making progress in these areas and see future growth coming from new categories we have targeted for expansion. And we're well positioned with our launches of many new products in our core product categories, with innovations to address the need to drive restaurant efficiencies, labor reduction, and enhanced speed of service. As highlighted on prior calls, we have launched a record number of industry-leading new solutions across all product categories, both hot and cold.
Speaker Change: We also continue to focus on new market share opportunities, expanding into underpenetrated categories for Middleby, such as beverage and ice. We're making progress in these areas and see future growth coming from new categories we have targeted for expansion.
Speaker Change: And we are well positioned with our launches of many new products in our core product categories.
Speaker Change: with innovations to address the need to drive restaurant efficiencies, labor reduction, and enhanced speed of service. As highlighted on prior calls, we have launched a record number of industry-leading new solutions across all product categories, both hot and cold.
Timothy Fitzgerald: We also continue to invest in and progress our forward-looking technology initiatives that will pay off in the longer term. Middleby is positioned to lead in areas of automation, digital, and IoT, innovation that we believe will shape the future of the restaurant industry. As a residential business, the housing market remains challenging with very low levels of existing home sales, new home starts, and remodels. While this is having a significant impact on our business today, we believe it will ultimately lead to pent-up demand with the benefits of recovery in the years ahead. And while the residential market will take time to fully recover, the luxury end of the market has shown recent improvement.
Speaker Change: At a residential business, the housing market remains challenging with very low levels of existing home sales, new home starts, and remodels. While this is having a significant impact to our business today, we believe it will ultimately lead to pent-up demand with the benefits of recovery in the years ahead.
Timothy Fitzgerald: We realized organic growth in the second quarter and expect that to continue through the balance of the year. Despite the challenging market, we are better positioned than ever with our industry-leading brand portfolio and exciting launches of many new products, with a wide breadth of designs and innovations. Operationally, we've made investments that will benefit our efficiencies and quality, and we are confident this will also support our efforts to achieve our profitability targets as normalized volumes return.
Speaker Change: We realized ordered growth in the second quarter and expect that will continue to progress through the balance of the year.
Timothy Fitzgerald: At our food processing business, the pipeline of active projects continues to remain strong for Expansion and Needed Upgrades, with requirements from customers to increase throughput, reduce labor, minimize food waste, and with a growing focus on sustainability. Furthermore, automation remains in great demand.
Timothy Fitzgerald: Our customers are proceeding cautiously as they monitor food costs and the interest rate impacts on larger projects. However, as market dynamics have become more stable, we have seen improved conversion to orders in the second quarter and continue to see a constructive backdrop for the second half. We continue to execute on our strategy to become the leading provider of best-in-class, full-line, and integrated solutions for protein and bakery processors. We believe this strategy is resonating, and we are positioned to partner with our customers as they evolve their businesses and address the need for automation in their operations.
Speaker Change: However, as market dynamics have become more stable, we have seen improved conversion to orders in the second quarter and continue to see a constructive backdrop for the second half.
Speaker Change: for the Protein and Bakery Processors. We believe this strategy is resonating, and we are positioned to partner with our customers as they evolve their businesses and address the need for automation in their operations.
Timothy Fitzgerald: In closing, while we navigate the near-term market conditions, we continue to focus on executing our strategic business initiatives, expanding our profitability, and growing our cash flow, while building upon our competitive advantage at each of our three industry-leading food service businesses. And we are confident this is setting us apart for the long term. Now I'll pass the call over to James to spotlight some of the exciting new solutions we have introduced in our food processing group.
Speaker Change: As we continue to expand our best-in-class solutions at this segment, we're also extending into new applications and categories, expanding our addressable market and providing for continued future growth opportunities.
Speaker Change: In Q3 of 23, I went deep into ICE and all the opportunities that are happening at Follett and ISTRO, and that we expect to see an additional $50 million of incremental revenue between these brands in 24.
Speaker Change: which I've discussed on previous calls. For those that remember, the TurboChef produces the highest product yields, best tasting, and visually appealing precooked bacon by injecting microwave, impingement, and steam into the cooking process.
Speaker Change: Another in-line solution by Middleby improves yields up to 7%.
Speaker Change: with Thern's IBS4600 slicer, which uses four independent lanes with four independent vision systems to ensure every slice of bacon is the same weight and thickness, regardless of belly variation.
Timothy Fitzgerald: Continuing with the precooked bacon line, let's shift from yield improvements to labor savings. Middleby will continue to invest in and acquire technologies to make our full line processing solutions the most advanced and economical for our customers to operate. I look forward to discussing further advancements in the Middleby Processing Group on later calls. Thank you, and over to you, Brian. Thanks, James. Now, you've made me a little hungry here, so I'm going to have to try and get through this quickly so I can get to a second breakfast.
Speaker Change: Continuing with the precooked bacon line, let's shift from yield improvements to labor savings.
Speaker Change: In looking at the brands contributing to the labor reduction, VMAC's Auto Comber and PacPro's Underleaving and Stacking systems work together to reduce manual labor by automatically combing and decombing bacon bellies and stacking full bacon sheets without human hands.
Speaker Change: By combining the yield and labor improvements on Middleby pre-cooked bacon lines, our customers can expect to save $1.3 million per line per shift over a year.
Speaker Change: There are advancements in breading and cutting.
Speaker Change: which nets approximately $900,000 per year in material savings.
Speaker Change: and capacity improvements, our customers can expect a six-month payback on MP's new thoroughbredder.
Speaker Change: Progressing down the line, we move into MPs.
Speaker Change: Friar with Filter Automation's newly integrated filtration system.
Speaker Change: by combining the MPFriar and Filtration Automation's Micron Pro filtration
Speaker Change: We can extend oil life from 36 hours typically to over 480 hours typically, thus reducing oil expense by 13 times, which saves approximately $500,000 per year in oil for a typical 2,000-gallon fryer.
Speaker Change: It is important to note that since the NP breading system, the thoroughbredder, improves breading adhesion, we lose less breading into the fryer, which improves oil life as well.
Speaker Change: The Micron Pro filtration system is completely autonomous and filters nearly continuously, only stopping four minutes per hour to expel the filtered material, i.e. the filter cake from the system.
Speaker Change: By doing this, we reduce the amount of free fatty acids and prevent the formation of polar compounds. These are the chemical species that denature oil.
Speaker Change: Lastly, the Micron Pro uses no consumables or accessories, and since the filter cake has very little residual oil, less than 2%, the cake can be used for pet food, animal feed, and fertilizer, making it the most economical, sustainable solution for frying.
Speaker Change: Middleby will continue to invest and acquire technologies to make our full line processing solutions the most advanced and economical for our customers to operate. I look forward to discussing further advancements
Speaker Change: and the Middleweed Processing Group on later calls. Thank you, and over to you, Bryan.
Bryan Mittelman: Thanks, James. Now, you've made me a little hungry here, so I'm going to have to try and get quickly through this so I can get to a second breakfast.
Bryan Mittelman: But in the meantime, for the second quarter, we generated revenue of $992 million, which was a 7% increase sequentially over Q1, and our adjusted EPS was $2.39. Commercial food service revenues were down 3.9% organically versus the prior year, yet the adjusted EBITDA margin of 28% was slightly above the prior year. We expanded margins slightly over the prior year on lower revenues and over a Q1 by 200 basis. Our recent trends are positive for food processing as well. We grew 9% sequentially.
Bryan Mittelman: But, in the meantime, for the second quarter, we generated revenue of $992 million, which is a 7% increase sequentially over Q1.
Speaker Change: Our adjusted EBITDA was $216 million at a margin of almost 22%, which was up 180 basis points from Q1. All the margin values I will discuss today are on an organic basis, meaning excluding any acquisitions and FX impacts.
Bryan Mittelman: Q2 GAAP earnings per share with $2.13 and our adjusted EPS was $2.39
Speaker Change: Commercial food service revenues were down 3.9% organically versus the prior year, yet the adjusted EBITDA margin of 28% was slightly above the prior year.
Bryan Mittelman: Recall that this is the toughest comp we will face given record revenues for this segment in Q2 last year.
Bryan Mittelman: Our recent trends are positive as we grew revenues 5% sequentially. We expanded margins slightly over the prior year on lower revenues and over Q1 by 200 basis points.
Bryan Mittelman: In food processing, revenues for the second quarter were over $179 million.
Bryan Mittelman: We were also facing a tough comp here. While we did see a 5.7% decline organically, this was our second best Q2 ever for this segment.
Bryan Mittelman: Our recent trends are positive for food processing as well. We grew 9% sequentially. Our adjusted EBITDA margin remains strong at 24%, which is a slight increase over Q1 and 200 basis points above the prior year.
Bryan Mittelman: Our adjusted EBITDA margin remains strong at 24%, which is a slight increase over Q1 and 200 basis points above the prior year. While Q3 orders have started a little bit slower, which is typical seasonality for us, as we often see this metric being lighter than Q2, we still should see sequential revenue growth for the company during the back half of the year, as well as year-over-year revenue growth. We also anticipate that the cost-reduction actions will help boost the business to double-digit margins over the second half of this year.
Bryan Mittelman: In residential, we saw an organic revenue decline of 6.7% versus 2023. The adjusted EBITDA margin was 9%. These revenues were actually higher than what was expected entering the quarter and represent nearly 11% sequential growth.
Bryan Mittelman: We delivered exceptionally strong operating cash flows at $150 million for Q2. It was our best second quarter ever.
Bryan Mittelman: Operating cash flows are over 765 million dollars for the trailing four quarters. Our free cash flow over the past 12 months exceeds 700 million dollars and our total leverage ratio is now down to under 2.3 times.
Bryan Mittelman: Before I get into discussing our outlook, I want to remind everyone what I noted when speaking to you one quarter ago.
Bryan Mittelman: At that time, our expectation of total Q2 revenues was to be up at least mid-single digits sequentially from Q1, but given the tough comps, we also expected to fall short of the prior year.
Bryan Mittelman: We delivered as expected. Sequentially, we had growth in all our segments. We were up 7% for the entire company. We expanded margins. We had record cash flows. Market conditions are not easy, but we continue to deliver solid results.
Bryan Mittelman: Order trends have been positive. Q2 was our best quarter for orders over the past two years for the total company and for each segment individually.
Bryan Mittelman: Orders were up 9% sequentially and over 15% versus the prior year. Food processing had their best order quarter ever.
Bryan Mittelman: Q3 orders have started a little bit slower, which is typical seasonality for us, as we often see this metric being lighter than Q2. We still should see sequential revenue growth for the company during the back half of the year.
Bryan Mittelman: as well as year-over-year revenue growth.
Bryan Mittelman: To provide greater insights, I will
Speaker Change: In commercial, for Q3, we anticipate revenues will grow low single digits sequentially and be generally flat to prior year.
Bryan Mittelman: looking out to Q4, with order rates improving over the past four quarters and assuming positive trends persist, we would see mid-single-digit revenue growth both sequentially and year-over-year.
Bryan Mittelman: Moving on to food processing, we continue to see strength in this business.
Bryan Mittelman: We expect second half revenues will be above first half and above prior year levels.
Bryan Mittelman: Q3 and Q4 could see double-digit year-over-year increases.
Bryan Mittelman: In residential, the good news is that the order trend is continuing to move upward with Q2 being up over Q1 and above prior year levels.
Bryan Mittelman: Q2 orders were the best we have seen in two years. Nonetheless, Q3 revenues will be down from Q2, mostly due to seasonality impacts both in outdoor products and our European-based manufactured brands.
Bryan Mittelman: We continue to believe at this time that for the third and fourth quarters, we will also deliver year-over-year growth. We remain committed to expanding our margins. We look forward to returning to Grove in the second half of the year and beyond. Yeah, you know, thanks. Thanks, mate.
Speaker Change: We are growing revenues with solid margins and have strong cash flow generation. This stands as proof that we can deliver tasty results even in tough market conditions.
Bryan Mittelman: We remain focused on operational efficiency and optimally managing resources. We are sharply focused on controlling and reducing our costs. We remain committed to expanding our margins.
Speaker Change: We will now begin the question and answer session.
Speaker Change: And the first question will come from Mig Dobre with Baird. Please go ahead.
Mig Dobre: And related to this, Bryan, how should we think about margin if you're going to be seeing that kind of growth in the back half for food processing?
Unknown Executive: No, things are, you know, overall good in food processing, right? But we, Great. If I may, one follow-up on commercial food service. You know, you talked about orders getting better. You do see orders more lining up with when demand is needed, right? With our shorter lead times, with our backlog coming down, you know, customers and our dealers are ordering, I would say, more in real time versus what they have in the past. So, I think you see that lining up.
Bryan Mittelman: Yeah, you know, thanks, Meg. You know, things are, you know, overall good in food processing, right, but we...
Speaker Change: in about 15, I'll say, you know, full line solution areas. So, you know, there are a variety of stories in there. I know you asked about protein, but let me briefly.
Bryan Mittelman: and a touch on bakery, and then I will pivot over to protein. You know, bakery overall has been, I'll say, steady after a really strong year. You know, last year, you know, buns continue to do, you know, really, really well for us.
Speaker Change: Meat costs have been going up and such. Things have been improving in poultry for us. We have been.
Bryan Mittelman: performing strong there.
Speaker Change: and as we look at, I'll say, the red meat.
Bryan Mittelman: And pork side of things, I think we view those, you know, improving over time, right? It takes a little bit more time, I'll say, for, you know, the supply, you know, to react there, just given, you know, the cycles involved with, you know, developing the inputs, you know, there.
Bryan Mittelman: are coming through.
Bryan Mittelman: On the margin side, you know, we made tremendous progress last year, and, you know, I think we will have, you know, some progress this year, certainly, you know, where we're generally at, you know, our target levels overall, as I, you know, think about, you know, multiple quarters, not just one.
Bryan Mittelman: You know, we're very strong, you know, given the solutions, the technology we've built out. Ultimately, we're still in the earlier stage. So, I mean, I think that's the excitement, you know, as he went through that, as we look at.
Bryan Mittelman: You know
Bryan Mittelman: Greenfield, you know projects come through and I think you know, so that's just kind of been
Bryan Mittelman: [inaudible]
Speaker Change: Tim noted, you know, the really large projects are a little bit slower, you know, this year than last year and those, you know,
Speaker Change: But your messaging, as I understood it, is a little bit mixed in terms of what's going on with customers and market trends.
Speaker Change: So I guess from your perspective, the improvement in orders, is this just a function of, you know, some of the channel destocking running its course and we're starting to comp against, you know, prior prior period destock, or is this
Speaker Change: Yeah, good morning Meg, this is Steve. So it is a function to some extent of, I'll call it a period of normalization of orders, right? We had to work through inventory that we've talked about being in the channel. We believe that is largely behind us.
Speaker Change: You do see orders.
Bryan Mittelman: more lining up with when demand is needed right with our shorter lead times with our backlog coming down you know customers and our dealers are ordering I would say more in real time versus what they have in the past so I think you see that lining up
Unknown Executive: I still think you see, you know, our chain customers ordering to fulfill new store demand even though it has, you know, ebbed and flowed. And there's been some push-out just with a slower start to the year for some of the chains still working through permitting issues and labor issues that they're facing. So, you see new store openings push out a bit, but the chains have really still committed to their overall pipeline over the next 6, 12, 18 months, which we're encouraged by.
Bryan Mittelman: I still think you see, you know, our chain customers, you know, ordering to fulfill new store demand, even though it has, you know, ebbed and flowed and there's been some push out.
Bryan Mittelman: just with a slower start to the year for some of the chains.
Bryan Mittelman: still working through permitting issues, labor issues that they're facing, so you see new store openings push out a bit, but the chains have really still committed to their overall pipeline over the next 6, 12, 18 months, which we're encouraged by.
Unknown Executive: I still think you have, you know, the dealer channel, which Tim talked about briefly in his opening comments, their strengthening backlog with their end user customers has been positive, and I think you're starting to see that come through a bit. I do believe that actually comes through the back half of the year.
Bryan Mittelman: I still think you have, you know, the dealer channel, which Tim talked about briefly in his opening comments You know, they're strengthening backlog with their end-user customers
Tim Fitzgerald: has been positive.
Speaker Change: and I think you're starting to see that come through a bit. I do believe that actually comes through.
Speaker Change: you have the back half of the year, the timing of how that comes through.
Steven Spittle: The timing of how that comes through is maybe a little bit up in the air as we go through the back half of the year. But I think the encouraging point is that the backlog that our dealer channel partners have in our communication with them is certainly stronger than it was at the beginning of this year and certainly stronger than it was at the back half of last year. Yeah, Bryan, again, Steve, a good question.
Bryan Mittelman: is maybe a little bit up in the air as we go through the back half of the year, but I think the encouraging point is that the backlog that our dealer channel partners have in our communication with them is certainly stronger than it was at the beginning of this year and certainly stronger than it was the back half of last year.
Speaker Change: All right. Thank you so much.
Speaker Change: The next question will come from Bryan McNamara with Canaccord Genuity. Please go ahead.
Bryan McNamara: Good morning, guys. Thanks for taking the questions. First off, Lamb Westin is an important supplier to QSR. They gave some pretty negative guidance last week. McDonald's call earlier this week was all focused on getting value right to combat traffic weakness.
Bryan McNamara: So with QSRs and restaurants overall, obviously a large portion of your commercial food service business, how do we think about any potential impact or hesitation from these customers to invest in the equipment you offer when this traffic is challenged? And can you remind us how long order lead times are typically in that business?
Steven Spittle: You know, I would say, in spite of, you know, some of the challenges we've seen within a couple of the QSRs to start the year, the challenges that they still face in their restaurants have not gone away. In many cases, it actually brings them even more and more to the forefront.
Speaker Change: Yeah, Bryan, again, Steve, good question. You know, I would say, you know, in spite of, you know, some of the challenges we've seen within a couple of the QSRs to start the year, the challenges that they still face in their restaurants,
Bryan Mittelman: So all the challenges we've talked about, whether it's around the cost of labor, which is more challenging than ever, utility costs via service, consistency of product, focus on, you know, the profitability of their franchisees, those are all still extremely relevant. And those all still point to solutions that Middleby can offer. So even in spite of some of those challenges that you're referencing, I would say the discussions and the pipeline of products that we have with our, you know, in this case, QSR customers remain, you know, very strong. I would also say even though QSRs are a big part of our overall, you know, end user, you know, segment. Yeah, this is Bryan.
Speaker Change: have not gone away. In many cases, it actually brings them even more and more to the forefront. So all the challenges we've talked about, whether it's around the cost of labor, which is more challenging than ever, utility costs via service, consistency of product.
Bryan McNamara: focus on the profitability of their franchisees, those are all still extremely relevant, and those all still point to solutions that Middleby can offer. So even in spite of some of those challenges that you're referencing, I would say the discussions and the pipeline of products that we have
Speaker Change: with our, you know, in this case, QSR customers remains, you know, very strong. I would also say, even though QSR are a big part of our overall, you know, end user, you know, segment.
Speaker Change: you see strength in other segments like fast casual right now there's a lot of you know successes in those segments and those are a lot of customers I think have been
Speaker Change: Great, that's helpful. And then, I guess, secondly, it was nice to see some material, sequential improvement in residential and the directional guidance suggestion. We'll get back to growth in Q4. Can you provide a little more context or color on that improvement, whether it was in kitchen and appliances or grills and, you know, how H2 should look, I guess, by category there?
Bryan Mittelman: You know, I'll take that one. It was, you know, pretty consistent across the board, you know, as I think about, you know, the geographies. You know, we have noted before that we are, you know, seeing good progress with some of the European products that we've been importing to the U.S., and those continue to grow. And we look, you know, look forward to, you know, more of that as we have more products that will be certifying for, you know, the U.S.
Speaker Change: Yeah, this is Bryan, you know, I'll
Bryan Mittelman: I'll take that one. It was pretty consistent across the board as I think about.
Speaker Change: and the geographies. We have noted before that we are
Speaker Change: [inaudible]
Bryan Mittelman: I previously talked about how, I'll say, within some of the outdoor products, the ordering pattern was feeling a little different this year. And, you know, for our outdoor products, we did have a bigger, you know, Q2 than, you know, Q1. And I'll remind folks, again, while it's still feeling like, you know, summer in probably many of the places we're all calling from, Q3, you know, does become a slower quarter for our sales to, you know, you know, the retailers, and so that becomes part of, you know, the story I noted for how things will evolve into Q3 over Q2.
Speaker Change: for the U.S.
Bryan Mittelman: I previously talked about how I'll say within some of the outdoor products the ordering pattern was feeling a little different this year and you know in our outdoor products we did have a bigger
Speaker Change: Q2 than Q1.
Speaker Change: And I'll remind folks again, while it's still feeling like, you know, summer and probably many of the places we're all calling from, you know, Q3, you know, does become a slower quarter for our sales to, you know, you know, the retailers and, you know, and, and so that becomes part of, you know, the story I noted for how.
Speaker Change: Things will evolve into Q3 over
Bryan Mittelman: But I'd say, you know, the other North American-based premium brands had a good Q2. You know, some of the other European brands in their home markets were probably a little bit more modest. But we, you know, believe those will also pick up as we move through the back half of the year. Great, thanks a lot. The next question will come from Jeff Hammond with KeyBank. Please go ahead.
Speaker Change: over Q2. But I'd say, you know, the other North American-based premium brands had a good Q2. You know, some of the other European brands in their home markets were probably a little bit more, you know, modest, but we, you know, believe those will also, you know, pick up as we move through the back half of the year.
Speaker Change: Great, thanks a lot.
Speaker Change: The next question will come from Jeff Hammond with KeyBank. Please go ahead.
Unknown Executive: He just wanted to come at kind of the, Yeah, I think it was a little bit of both. I mean, I think, you know, as we were looking at, we've got a very strong pipeline of deals. So that's never really changed for a long period of time. So certainly, we think that's a Creature of Habit is no longer there, but apologies for that, and I did join late, so I apologize. Sorry, yeah, Raymond James, just to clarify for the record, right, this is Tim Thurmond. I'm sure a lot of people really care, but yeah.
Jeff Hammond: Hey, good morning guys.
Speaker Change: He just want to come at kind of the
Speaker Change: You know the restaurant and consumer weakness, you know, we're hearing about maybe in a little different way one
Speaker Change: You know, the new store growth you seem to be characterizing kind of slow start and more labor permitting than kind of the macro, but just wondering in past macro cycles.
Speaker Change: You know, if that informs anything about either continued deferrals or people backing off some of the store growth.
Steve: I think Steve you've talked about kind of this pent-up aftermarket opportunity and I'm wondering you know if you're seeing anything there or again if maybe some of this restaurant weakness maybe pushes that out as well.
Steve: Yeah, good morning, Jeff. Good, good questions. Again, back to new store openings. Do I think that there is.
Speaker Change: a part of the the overall macro environment that is causing some push out of the new store openings yes I certainly do along with what we've referenced along you know the permitting and labor challenges of just getting restaurants open
Speaker Change: Again, I've said before, I think one of the best byproducts of the last several years is we do have a lot more visibility and transparency into
Speaker Change: new store openings with our big chain customers.
Speaker Change: So even though I think, as I've said, you know, you see the push out in some in some chains to future quarters, I think the overall pipeline in the number of stores, they're still trying to open both domestically and especially on the global front.
Speaker Change: remains, you know, I think, strong from that perspective. Again, a reminder that new store openings were not happening at all going into COVID with these big chain customers. So, this is still a relatively, you know, new nuance the last couple of years. In terms of, you know, the pent-up
Speaker Change: replacement cycle, which I believe is what you're referencing. I think we're starting to see a little bit of that come through. I still, I still believe that that will be a primary driver of demand, certainly into next year and probably into 26, just knowing.
Speaker Change: Again, as I've talked before, we had pent-up replacement going into COVID, got pushed to the right during COVID, and then through supply chain, and then this focus on new store openings, I think, has pushed it a little bit further out.
Speaker Change: I do think that is still, you know, there to come through. We're seeing it maybe a little bit in some of the order pickup in the second quarter, but I actually think it's a bigger driver the back half of the year and certainly into next year as we go forward.
Speaker Change: Okay, great. And then you guys have been kind of quieter on M&A, and I'm just wondering if this is more on purpose to kind of focus on the core and...
Speaker Change: you know get the balance sheet in good shape or if it's you know just a harder environment to get stuff to the finish line it seems like in general we're starting to see M&A activity move again.
Speaker Change: Yeah I think it was a little bit of both. I mean I think you know as we were looking at you know we've got a very strong pipeline of deals so that's never really changed for a long period of time so certainly we think that's a
Speaker Change: huge continued opportunity going forward. So I think, you know, we expect that probably we'll start picking up here. I think as we went through
Speaker Change: The last year or two, multiples got a bit out of whack on one side, and on the other side, I think it was very hard.
Speaker Change: for there's a gap I would say with our projections of the businesses of the companies we were talking to and their Projections of those businesses, so I think a lot of that is now starting
Speaker Change: to come back in line. And I think, you know, at the same time, you know, we
Speaker Change: did about 30 acquisitions in the last, you know, three to four years, so it's not like we haven't
Speaker Change: I haven't done quite a bit over a recent period, but that allowed us to bring those into the fold, focus on those operationally. We continue to see opportunities there with synergies, both top line and bottom line, and that de-lubber a little bit. So I think
Speaker Change: You know, we think we're in a very good position now, kind of given the backdrop.
Speaker Change: the strength of the balance sheet, the cash flow generation.
Speaker Change: as well as some of our competitors, you know, our positions. So likely you'll see us kind of be a little bit more active than maybe we were over the last 12 months.
Speaker Change: Okay, thanks so much.
Speaker Change: The next question will come from Tim Thine with Citigroup. Please go ahead.
Speaker Change: I make a creature of habit.
Speaker Change: that's no longer there but the apologies for that the and I I did I did join late so yes sorry yeah yeah Raymond James just there
Speaker Change: And to clarify for the record, right, this is Tim Thurman, Raymond James asking us a question. Alright, we made sure we got the right Tim. Proceed, Tim. Thanks.
Unknown Executive: No, well, we do, so we appreciate that you're still covering us, that you moved, so thank you for that. Apologies, I joined a second late, so apologies if this is redundant, but I have two questions on the commercial business, and the first is, Yeah, I mean, I think it's more of the latter, right? Like, the more game-changing innovation and technology is, the longer it is to bring it into the market, right?
Speaker Change: I'm sure a lot of people really care but yeah. Well we do so we appreciate that you're still covering us that you moved that so thank you for that.
Speaker Change: I have two on the commercial business. The first is
Speaker Change: just regarding the competitive dynamics around and around the whole kind of technology and
Speaker Change: connectivity space. And I ask that with the view that it seems like one of your larger competitors seems to be kind of backing away from that. And I'm curious, I guess, one, does that
Speaker Change: Is that, do you think, a reflection of what the customers are demanding or not demanding? I.e., has there been...
Speaker Change: lower movement or kind of acceptance of that, what have you, and then...
Speaker Change: I guess, B, is that, if not, presumably, that may be giving you some opportunity. So maybe just your thoughts around the connected kitchen arena and what you're seeing on that front. And I have a follow-up after that.
Unknown Executive: So, I mean, I think we've doubled down, made, you know, significant progress over the last few months. Tim, the increase did, as we announced, go forward in June. As announced, it was a, yeah, I'll call it a low single-digit increase. Again, I think I'll keep saying it.
Speaker Change: Yeah, I mean, I think it's more of the latter, right? Like, the more game-changing innovation and technology is, the longer it is to bring it into the market space, right? So, I mean, I think we've doubled down, made, you know, significant progress over the last
Speaker Change: 12 months, bringing more and more products online tied to the Middle B1 Touch Control that James has launched, which has also been
Speaker Change: Pretty transformational, right? I mean, I think it's come on, you know, so many new products as we started at the beginning of this this year
Speaker Change: and now you've got IOT out of the box, right? So those are significant investments we've made, which again, we kind of talk about a lot, but I mean, those are.
Speaker Change: are things that we're looking three years ahead, not just what's out there for the quarter.
Speaker Change: Technology is going to make its way, you know, more and more into the restaurants and we see it, you know, now today in our customers.
Speaker Change: do want that. We're having more and more adoptions. We engage with a lot of customers down at our innovation centers, and we've had a lot that frankly say, hey, we're not going to buy the product unless it's connected, right? So we're here, you know, that takes time where you go through an evolution.
Speaker Change: and we're spending a lot of time.
Speaker Change: educating end-users, educating our channel partners, kind of fine-tuning.
Speaker Change: the pitch on ROI and getting more experiences out there. So it is getting traction and we believe in it. And I think, you know, the good news is.
Speaker Change: As you said, as this role, you know, as we kind of think about where we're at, you know, three years from now.
Speaker Change: relative today, you know, we're the game in town, right? Because I think others haven't had the, you know, the staying power and made the investments and also have the scope and scale of the products and solutions that we have. So again, I think we think that remains a big.
Speaker Change: competitive advantage that will show up over time in a big, you know, part of shareholder value that will be
Speaker Change: be creating. There is a lot of innovation for today also. I think kind of going back to the chains and, you know, the replacement cycle, a lot of them are, you know, spending more time, adopting
Speaker Change: the next generation of technology. Sometimes that slows things up as well, but we see kind of
James: you know, a lot of the fruits of what James talks about with a lot of the new products coming out from
James: it automated.
Speaker Change: grills to ovens to induction etc that that would get more and more you know uptake here.
James: Can I just also add, this is Steve, I think one of the reasons also Tim why I think you see
Steve: Some others dropping off and we're gaining momentum is, you know, the end-user customer wants to deal with very few
Speaker Change: but proven suppliers. And so there's nobody else out there that has, can supply.
Speaker Change: the technology of the underlying equipment, layering in the controls, layering in an IoT solution that connects the entire.
Speaker Change: kitchen, utilities, safety, et cetera, and then also can add in our own robots or automation on top of it. So Middleby can truly provide all aspects of the kitchen. There's nobody else that can do that. So that's why I think you're seeing kind of a one-off.
Speaker Change: here or there that have popped up, you know, drop away because they are reliant on other suppliers to provide the equipment, to provide the IOT, and I think that's why you're seeing our end-user customers move away from that and continue to move towards us.
Speaker Change: Interesting. OK. And then just on pricing, I.
Speaker Change: As we think about the, I don't imagine they're, I could be wrong, but I'm just curious as to that. I don't think that the magnitude would of the, of the.
Speaker Change: [inaudible]
Speaker Change: proposed price increase that I think we're aiming for mid-June would be worthy of a pre-buy, but I'm just curious if you think that...
Speaker Change: that flattered the order growth in the quarter at all. And then, I guess, Part B is how should we think about the realization of that in terms of the second half revenue and margins for the commercial business.
Speaker Change: The increase did as we announced go forward in in June as as announced it was a
Speaker Change: I'll call it a low single-digit increase.
Speaker Change: Again, I think I'll keep saying it. I think we've been very thoughtful, tried to be very thoughtful about how we've addressed pricing.
Speaker Change: in a competitive market, also knowing that there still are inflationary challenges that we're faced with. So we go, as opposed to just taking a broad increase a certain percent across the board, it really has been a skew by skew.
Unknown Executive: I think we've been very thoughtful. We've tried to be very thoughtful about how we've addressed pricing in a competitive market, also knowing that there still are inflationary challenges that we're faced with. So, yeah, we go, as opposed to just taking a broad increase, a certain percent across the board, it really has been a skew-by-skew, customer-by-customer, you know, approach in terms of the increase. I do not believe we saw a really big, you know, buy-ahead in terms of driving orders in June.
Speaker Change: customer-by-customer approach in terms of the increase.
Speaker Change: I do not believe we saw a real big buy ahead in terms of driving orders in June.
Speaker Change: It maybe happened to a very minor extent, but I do not believe, given it wasn't as significant as an increase as prior years, so I do not believe we saw that. Again, pricing is a dynamic in forward-thinking evolution, so it will continue to, again, look at SKUs and look at customers as even the rest of this year unfolds.
Speaker Change: So you will see a minor impact, I would say, in top line revenue and, you know, margin progression in the back half of the year coming from, you know, the price increase that went live at the end of the second quarter.
Speaker Change: Yeah, Tim, just to add on to that, our dealers are very focused on working capital and the costs given the higher interest rates right now, so in the past, we probably would have seen a little bit of a pull ahead. Absolutely, they did not do that this time because that would have been offset by kind of the carrying costs, how they look at that. And as we've kind of gone through the...
Speaker Change: second quarter, you know, and again, the lots of
Speaker Change: discussions we had over the quarters of destocking, they're kind of at a
Speaker Change: We've heard from many dealers that they are carrying less stock than they were
Speaker Change: in COVID. So really, I think we've gotten, you know, that not only out of the system, but if they are to move back to normalized stocking levels, we're kind of a little bit under the average from the last several years.
Unknown Executive: It might have happened to a very minor extent, but I do not believe, given it wasn't as significant as an increase as prior years, so I do not believe we saw that. Again, you know, pricing is a dynamic in forward-thinking evolution, so it will continue to look at skews and look at customers as even the rest of this year unfolds. So, you will see a minor impact, I would say, in top-line revenue and, you know, margin progression in the back half of the year coming from, you know, the price increase that went live at the end of the second quarter. Got it. All right. Thank you for the time. Hey, good morning.
Speaker Change: Got it. Got it. All right. Thank you for the time.
Speaker Change: The next question will come from Tammy Zaccaria with J.P. Morgan. Please go ahead.
Unknown Executive: Thank you so much for taking my question. So, I have a follow-up on the residential kitchen segment comments. So, I think you're expecting sales to be relatively in line versus last year. So, what does that mean for sequential growth? And then, similarly, how should we think about margin for this segment sequentially versus the 9.1% we saw in the second quarter? Hey, Tami. It's Brian.
Tammy Zaccaria: Hey, good morning. Thank you so much for taking my question. So I have a follow-up on the residential kitchen segment comment. So I think you're expecting sales to be
Tammy Zaccaria: in line versus last year. So, what does that mean for sequential growth? And then, similarly, how should we think about margin for this segment?
Speaker Change: sequentially versus the 9.1% we saw in the second quarter.
Bryan Mittelman: I'm sorry if my comments weren't clear enough. So let me take another shot at it. We do think margins will get back to double-digit levels in Q3 and Q4, and we'll see if that also comes out to having generated double-digit margins for the year in total, as we are expecting more benefits from the cost actions we have taken and also the mixed impacts of the underlying brands as it relates to the total segments. So hopefully that clarifies things. Got it. Yeah, that does do it. Thank you.
Tammy Zaccaria: Hey Tammy, it's Bryan. I'm sorry if my comments weren't clear enough, so let me take another another shot at it.
Speaker Change: to think about residential quarter to quarter.
Speaker Change: Q3 revenues are anticipated to be below Q2.
Speaker Change: but consistent with prior year residential, prior year quarter. And again, some of that, you know, is due to the seasonality of buying patterns of, you know, let's say the retailers in the outdoor space.
Tammy Zaccaria: as well as what happens with production and, I'll say, consumer buying levels for the European-based brands. And, you know, the size of our European businesses have also increased over time if you go back to the, you know, Novi acquisition.
Tammy Zaccaria: We do think margins get back to.
Tammy Zaccaria: double-digit levels in Q3 and in Q4, and we'll see if that also comes out to that having generated double-digit margins.
Tammy Zaccaria: for the year in total.
Tammy Zaccaria: As you know, we are expecting more benefits
Tammy Zaccaria: from the cost actions we have taken and also the mixed impacts of the underlying brands as it relates to the total segments. So hopefully that clarifies things.
Bryan Mittelman: So basically, sequentially, margin would be down, but sorry, sequentially, margin would be down. Yeah, yeah, Q3 margins, I'm sorry, Q3 revenues were below Q2 revenues, but the margin percentage for Q3 should have been above Q2. I think the one other comment is we kind of went through this the last several years. I mean, we're very intentional about cutting some of the SKUs of our lowest margin products, things that were not as profitable as we kind of move to a higher mix, which, again, is part of the strategy to expand our margins to those targets out there. So. Hey, thanks, guys. One to ask first:
Speaker Change: Got it. Yeah, that does. Thank you. So, basically, sequentially, margin would be down, but, sorry, sequentially, series would be down, but margin would be up.
Speaker Change: Yeah, Q3 margins, I'm sorry, Q3 revenues below Q2 revenues, but the margin percentage for Q3 should be above Q2.
Tammy Zaccaria: Mixed within the segment and benefits of our cost takeout activities.
Speaker Change: Got it, that's helpful. And then a second question from me.
Speaker Change: Are you able to share any comments on what you're seeing in terms of promotions in the commercial segment?
Speaker Change: We've heard from some players that there's some elevated discounts by some other players in the market.
Speaker Change: about your take on promotional trends you're seeing for the
Tammy Zaccaria: CFS segment.
Speaker Change: Before I turn it over to Steve, and I know you're referencing others out there, I suspect it is.
Steve: a large company that has a segment that has some overlap and competes with us. I know they had revenue growth, but margins down.
Steve: not the way that we typically operate our business, what we're trying to.
Tammy Zaccaria: increase the dollars. So, I mean, I think that's some of what you're seeing in the differentiated results, but I'll let Steve more directly address the customer dynamics in the marketplace on a day-to-day basis.
Steve: Yeah, thank you, Bryan. Tammy, I would say we've seen the competitive landscape.
Steve: from a promotional standpoint. It's at levels that I would say are normalized compared to pre-COVID, so I don't think it's anything
Steve: It's crazy going on out there. I think it is a normalized market at this point.
Speaker Change: Again, I think we have always been very focused on
Speaker Change: You know, driving margins, moving customers to, you know, better technologies, very focused on mix.
Matt: And Matt, you know, yes, pricing is always going to be a dynamic, but I think our teams have been so focused on those couple areas and I think you're seeing that come through, you know, in the margins in in the quarter and going forward. So.
Speaker Change: I think we'll remain very diligent. Obviously, we want to be competitive in the marketplace, but we're always, always very thoughtful about making sure we're thinking about margins, we're thinking about mix, and we're thinking about, most importantly, moving our customers to our best technology products.
Speaker Change: I think the one other comment is we kind of went through the last several years. I mean, we're very intentional about cutting some of the SKUs of our
Tammy Zaccaria: lowest margin products for things that were not as profitable as we kind of move to a higher mix, which again is part of the strategy to expand our margins to those targets out there.
Tammy Zaccaria: Those are some of the categories that you might see a little bit more price discounting So we're those are a lesser part of our portfolio today than they were several years ago
Speaker Change: Wonderful. Thank you.
Speaker Change: The next question will come from Walt Liptick with Seaport. Please go ahead.
Walt Liptick: Hey, thanks guys. I wanted to ask first about, you know, what you're seeing in the international markets versus the U.S. market. So the growth rates, again, were strong or international and, you know, why is that? And we're talking about the commercial food service segment.
Unknown Executive: You know, what you're seeing in the international markets versus the U.S. market. So the growth rates, again, were stronger in international markets. And, you know, why is that?
Unknown Executive: And we're talking about the commercial food service. So, and in CFS, as well as in Resi, you know, it sounds like the channel inventories are pretty lean. Are you still seeing any kind of drawdown, I guess, especially in residential?
Speaker Change: Yeah, well, it's a good question. I would point to, I think we have made a lot of good inroads. Specifically, I would call out, you know, the European markets, the Middle East, and, you know, India.
Speaker Change: in Asia, I think specific to
Speaker Change: Europe, I would say we've gone through a complete change in terms of people strategy over the last several years, investments in
Speaker Change: you know, new markets like Germany, we opened our...
Speaker Change: Innovation Kitchen in Madrid, Spain last year, which I think has paid dividends. We've had thousands of customers through.
Speaker Change: that innovation kitchen, obviously playing off all the success we've had out of the Dallas facility.
Speaker Change: So I think you're starting to see those benefits come through as well. I think when you look into Asia specifically, investments in your manufacturing facilities, whether it's in China, whether it's in the Philippines, whether it's in Australia.
Speaker Change: I think you're starting to see that really come through as well. So it is, to answer your question, I think it's more a reflection of, you know, work we've put in over the last several years to grow our brands, grow our people, and obviously grow our customer base in those specific markets.
Speaker Change: okay great and when you when you guys talked about the sequential growth in CFS you're talking about for both you know all regions I guess of the world all geographic regions
Speaker Change: and others.
Speaker Change: The comments were for the segment overall. I'm not, I think we've been a little bit, obviously more guidance providing, but I have not broken it down at the regional level.
Speaker Change: Okay. All right. No problem.
Speaker Change: So, and in CFS as well as in RESI, you know, it sounds like the channel inventories are pretty lean.
Speaker Change: Are you still seeing any kind of drawdown, I guess, especially in residential, or is it, you know, maybe another way to say it, are you starting to see, like, you know, a second round of,
Unknown Executive: Or is it, you know, maybe another way to say it, are you starting to see, like, you know, a second round of... Let me just add to that, if I can, you know, for a second, because, you know, I often get compared to others, you know, out there. I mean, this is an area that has been growing for us, you know, over time, it grew last year, and, you know, I think we are seeing, and I can base this on, you know, other comments from other public companies as to what they think about ICE, we are outperforming the competition here, and it isn't just due to, you know, one customer.
Speaker Change: channel refresh in residential as we get further into the year.
Speaker Change: Yeah, you know, a lot of our products are, you know, outdoors where, you know, we tend to have more in the channel, right, so a lot of the indoor products are more specified and, you know, and not stocked.
Speaker Change: In fact, you know, we're moving more and more, you know, made to order. So, really, the channel inventories has been around outdoor. Those have largely reset, and I would say kind of similar to the comment on commercial, I think.
Speaker Change: Our channel partners are cautious
Speaker Change: The grill season, you know, has been slower or maybe not, you know, as strong as as some of our customers and us would
Speaker Change: you know, would hope, so I think there's, and they're also kind of watching the P's and Q's with...
Speaker Change: inventory levels and cost of capital so that so
Speaker Change: They're in a good stocking position, so I think from that standpoint we're positioned as we do go into
Speaker Change: re-stocking, so it's kind of a healthy level right now. There is, you know, an opportunity as we kind of go up later into the year to see how they'll, they're better positioned going in the fourth quarter this year than last year in terms of stocking levels.
Speaker Change: And we are, you know, we are continuing to launch new products there. I mean, both indoor and outdoor, which, you know, we're excited about. I think that is some of the things that we think will help us in the back half of the year as we've got lots of new products, colors, designs.
Speaker Change: induction. We've got quite a bit that has come out in the first part of the year that's available in the second part of the year.
Speaker Change: The European brands continue to grow in the domestic market as well, so those are some of the things that, even with the challenging backdrop, we're still continuing to make some headway on.
Speaker Change: One last point.
Speaker Change: Just to make sure, you know, to clarify, I mean, because you did ask about outdoor, even though it's, I'll call it a modest part of the, uh,
Speaker Change: you know, the total segment. But our order trends, you know, being up have included, you know, the, you know, the outdoor brands as, you know, as well. So, you know, I think we have seen positive evolution of, you know, the inventory that's stocked for that subcategory within residential.
Speaker Change: Okay, great. So, Outdoor should be up in the third quarter too, quarter of a quarter.
Speaker Change: Yeah, I mean...
Speaker Change: I'm talking about what we've seen over the past year, you know, year-over-year in order trends. Again, the third quarter is always the challenging one for
Speaker Change: for outdoor. I mean, we do think, you know, Q3 of.
Speaker Change: will be, I'll say, at least at similar levels to last year, but that really isn't the quarter that matters, right? It gets a little bit more interesting as we're getting to Q4s, as we then are starting to load in for next growth season. But I was just trying to clarify your question where you were asking about channel inventories that we think the de-stocking, which as Tim tried to clarify, was probably most relevant of a question
Speaker Change: The outdoor side of things is not the headwind that it was going back a year and two ago.
Speaker Change: Okay, great. Thanks for that. And if I can ask one more just on Solid Ice who had a win with Starbucks?
Speaker Change: and I wonder you know how that's going if you know what the opportunities there if there are other near-term opportunities with Starbucks
Speaker Change: Yeah, we try to refrain from discussing any kind of specific
Speaker Change: [inaudible]
Speaker Change: point out that we've got a great, very exciting beverage and ice platform where we've got a lot of new products and technologies coming out.
Speaker Change: which also address speed of service, throughput, labor, etc. So I think there's a lot of growth opportunity there. The Niaga ice platform for Follett, which has got significant operating.
Speaker Change: Advantages as well as I'll say Preference with customers is doing very well, and that's part of the platform that's growing
Speaker Change: alongside ISTRO, which was one of the acquisitions we did in the last several years. We've been able to expand the platform here in the U.S.
Speaker Change: The U.S. needs larger ice capacities, so we've had a couple new products that came out.
Speaker Change: just really at the beginning of this year, which we've been gaining, you know, traction, both with our channel partners and with chains. So, again, we remain pretty excited about that platform and beverage overall with more to come.
Speaker Change: Let me just, you know, add to that if I can, you know, for a second because, you know, I often, you know, get compared to others, you know, out there. I mean, this is an area that has been growing for us.
Speaker Change: over time. It grew last year and I think we are seeing, and I can base this on other comments of other public companies, is that things about ICE, we are outperforming the competition here and it isn't just due to one customer. I mean, the amount of growth we're having is due to
Unknown Executive: I mean, the amount of growth we're having is due to, you know, broad adoption of, you know, our multiple ICE solutions across, you know, numerous, you know, numerous customers, right? So, this is why we capitalized on trends, and have brought in, you know, the product portfolio across, you know, commercial. So, you know, it's an area of great strength for us, and we do see that, you know, continuing again across a wide number of customers. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. The Ultimate Parody Site!
Speaker Change: you know, broad adoption of, you know, our multiple ice solutions.
Speaker Change: across, you know, numerous, you know, numerous customers, right? So this is why we capitalized on trends, have brought in, you know, the product portfolio across, you know, commercial. So, you know, it's an area of great strength for us, and we do see that, you know, continuing, again, across a wide number of customers.
Speaker Change: Okay, great. Okay. Thanks much
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Please go ahead.
Speaker Change: Thank you, everybody, for joining the call today. We appreciate the questions, and look forward to speaking to everybody next quarter.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: [inaudible]